Business Partner Concerns

A good business often needs partners who bring different or additional contributions. Sometimes substantial capital is needed from one partner and exceptional skills and work ethic are contributed by another. Sometimes a business needs marketing and management judgment from one partner and technical or scientific expertise from another. A good business partnership makes for a great business.

Forming the Business Entity. Business partners need to have their relationship supported by a solid legal framework and suitable legal entity. We apply our experience in setting up these relationships to form limited liability companies and corporations that meet our clients’ needs. We help think through the partner relationships to set up compensation, control, mutual understanding, fairness, dispute resolution, and exit strategies that work for our clients and their businesses.

Planning a Strategy. Our clients often have in mind long term growth goals. Growth and change in a business requires intelligent planning. We collaborate with clients on business strategy to inform a good choice for the business structure and drafting of legal documents. We take great satisfaction in seeing our clients’ businesses succeed and prosper.

Helping with Problems in the Business. Business partnerships are not easy. Business partners often ask us to help them resolve problems within their companies. The sources of business partner problems are many. At times, success or failure, or simply an opportunity to take advantage can motivate one partner to “squeeze” the other. The purpose may be control or money. The “squeezor’s” method may be secretive or blatant; it may use a poorly chosen paragraph in a Shareholder Buy-Sell Agreement or LLC Member Operating Agreement, or the lack of an agreement. The squeeze may be an attempt to use a special customer relationship or other profit opportunity to the special advantage of one partner against the other.

Business Partner Disputes. Often in partner disputes, one partner is dissatisfied with the performance or contribution of another. Majority shareholders or controlling members may seek to use their majority status to control the board of directors, to influence compensation, usurp company opportunities, or to favor their relatives. A lack of formalities in the bookkeeping or legal governance of the company may give rise to uncertainties that one partner may use to exploit to his or her advantage. Sometimes a tremendous opportunity for the company can give rise to a squeeze effort by one partner. Other times, a failing business may give a partner the incentive to protect his or her own self-interest at the expense of the other partners and the company.

We handle business partner matters at every stage, in corporations and LLCs, from start-up to break-up or sale of the company, from thoughtful drafting of documents at the beginning of company life, to hard fought litigation of business partner disputes at the end.